Special Coverage

Most consumers think of Honda Motor Co. Ltd., first and foremost, as a producer of high-quality cars. As for larger trucks and utility vehicles, John Mendel knows the auto maker has plenty of fertile ground to plow.

“If you put 100 consumers in a room and ask them to name 10 truck companies, Honda doesn’t roll off their lips,” says Mendel, executive vice president of American Honda Motor Co. Inc. “Our truck awareness is much lower than for the rest of the industry.”

And the latest sales figures suggest Honda is doing little in the marketplace to change that perception. Through the first three quarters of 2007, sales were down for four of the five vehicles Honda classifies as trucks: the Element (-32.9%), Pilot (-20%), Ridgeline (-10.9%) and Odyssey (-6.5%).

Only the hot-selling, fully redesigned CR-V midsize cross/utility vehicle is bucking the trend, posting a 28.7% gain in the first nine months over like-2006.

Through October, Honda’s U.S. sales were up 4.7% over like-2006 to 1,158,707 vehicles. Its Acura luxury division, however, continues to struggle, with deliveries slipping 9.3% in the first 10 months of the year to 149,612 vehicles, compared with like-2006.

Although sales are down for the Odyssey minivan and Pilot CUV, each is a benchmark in its respective segments.

The Pilot remains No.1 among large CUVs, according to Ward’s segmentation, leading the Chrysler Pacifica and Ford Freestyle (now Taurus X). But General Motors Corp.’s new large CUVs (GMC Acadia, Saturn Outlook and Buick Enclave) are selling well and, grouped together, could dethrone the Pilot this year.

Pilot sales have climbed consistently since 2002, but that streak is bound to end this year: Through October, Honda sold 101,383 Pilots. In all of 2006, it sold 161,037. A new Pilot is due in 2008.

Mendel considers the Odyssey “the king of minivans” and says its sales this year are topping the perennial favorite, the Dodge Grand Caravan, as well as the Toyota Sienna. However, factor in the Chrysler brand’s strong-selling Town & Country, and the Odyssey runs a distant second. A refreshed version of the Odyssey launched Oct. 15.

Honda’s two other trucks are struggling.

The boxy, niche-oriented Element sold 30,234 units through the year’s first 10 months. As of September, the Element placed sixth out of six small CUVs, according to Ward’s segmentation. The quirky Chevrolet HHR placed No.1.

But Mendel says the Element has a secure place in the Honda lineup. “It’s still a hit with buyers looking for something different,” he says. “It’s got a very loyal following.”

He sees it selling 35,000 to 40,000 units annually, although Element deliveries for 2006 totaled 54,881, according to Ward’s data.

And among compact pickups, the Ridgeline trails the Toyota Tacoma, Chevy Colorado, Ford Ranger, Dodge Dakota and Nissan Frontier. The “heavy-duty unibody” Ridgeline offers more functionality and better handling than most of those body-on-frame trucks, but also costs more.

Mendel says Ridgeline is meeting the auto maker’s expectation, which was to sell 50,000 units annually. In 2006, its first full year on the market, deliveries totaled 55,419. Yet, through October, Honda sold 36,964 Ridgelines.

Honda has plans for a second-generation Ridgeline. As long as loyal Honda customers need options when considering a pickup truck, the auto maker will remain in the segment, Mendel assures. “It’s very good business for us to be in,” he says. “The Ridgeline continues to do what we set out for it to do.”

Honda’s shining star is the redesigned CR-V, whose sales of 184,003 units through October already have soared past total 2006 deliveries of 151,499.

So far this year, the CR-V is No.1 in its segment, ahead of the Toyota RAV4 and Highlander, Ford Edge and Escape, Hyundai Santa Fe and Chevy Equinox.

The CR-V factors prominently in Honda’s claim to be North America’s most fuel-efficient auto maker. While others offer V-6 power, the CR-V only is available with a 166-hp 2.4L 4-cyl.

“If customers are going to shop for a vehicle with fuel economy in mind, then Honda’s probably going to be on their list in the segments where we compete,” Mendel says.

Throughout the rest of Honda’s portfolio, sales are brisk.

The Civic and newly redesigned Accord are on pace for another strong year, and the Fit subcompact is headed for about 70,000 deliveries in 2007, its first full year on sale.

Still, the Fit is fourth in this suddenly popular segment for small, economical cars, behind the Toyota Yaris, Nissan Versa and Chevrolet Aveo.

Honda has doubled Fit production in Japan to meet North American demand, but the auto maker remains capacity constrained to boost output much further, Mendel says. “The timing of that vehicle for the U.S. was really fortuitous,” he says.

Questions persist as to when – or if – Honda will decide to produce the Fit in North America. The auto maker’s new plant in Greensburg, IN, primarily is dedicated to Civic production but has flexibility to produce many different vehicles. Mendel says no decision has been made with regard to Fit production in Greensburg.

“Could it be? Anything’s possible, but there are no plans at this point,” he says. And although Honda sells a sedan version of the Fit in Indonesia and Southeast Asia, Mendel says there are no plans to bring it to the U.S.

The hatchback body style is selling well here and dovetails with Civic sedan and coupe offerings, Mendel says. Between the Fit, Civic and all-new Accord, Mendel says Honda has “three very strongly positioned vehicles.”

The new Accord is “off to a great start,” Mendel says. The biggest challenge was to improve the last-generation Accord, which was “winning shootouts in its last year of life,” when compared with competitors, he says.

With the new 3.5L V-6 equipped with Honda’s second-generation Variable Cylinder Management cylinder-deactivation system, Mendel says the Accord is a thrilling car to drive, while being fuel efficient. In addition, the Accord’s styling is more emotional and sporty than the outgoing model. “The last one didn’t have street presence,” Mendel admits.

The Acura luxury brand remains an also-ran in many vehicle segments. Its MDX and RDX CUVs are fresh in the market, but neither has exceeded sales expectations. New versions of the TSX and TL sedans are due next year.

The brand’s flagship RL sedan has slumped badly and gets a mid-cycle enhancement, arriving in spring 2008. Like the Accord, Mendel says the new RL “will have a lot more presence” and will retain its high-output V-6, while improving ride and handling.

Mendel admits the RL has “not met expectations,” but he says the vehicle has a secure place in the Acura lineup as its flagship. Competitor Infiniti, on the other hand, did away with its Q45 flagship last year.

“That is an area where we want to compete,” Mendel says. “The RL gives us that opportunity at the top of the line.”

Arriving in ’10 is the highly anticipated, all-new NSX supercar. At the 2007 North American International Auto Show in Detroit, Acura unveiled a V-10-powered NSX that hinted at the production version slated to arrive in showrooms. The car was not on display, however, at the recent Tokyo Motor Show.

Also on the performance front, Mendel is pleased to see Honda returning to the good graces of the “tuner crowd” of enthusiasts who, in the recent past, failed to identify Civic as a platform for aftermarket add-ons.

In the past few years, however, Mendel has seen the tide turn, as reflected at the Specialty Equipment Market Assn. show, an aftermarket bonanza held each fall in Las Vegas.

He missed the show this year but heard tuners had worked their magic with a sizable fleet of Hondas, primarily Civics and Fits. Mendel says he was at the 2006 SEMA expo and saw at least 30 Fits on display, “with everything from superchargers and turbochargers – an unbelievable array of stuff.”

His favorite vehicle at last year’s SEMA show was the ElementD, propelled by a 540-hp twin-turbo V-6 and named for its ability to drift sideways.

Mendel saw a video of the ElementD on the track and describes the “otherworldly” vision of a square column of smoke pouring off the back end of the Element, thanks to its odd aerodynamics, as it drifts around the track.

“I don’t think there’s any question to tuners that Honda still is the vehicle of choice in terms of not only providing cutting-edge engine technology but giving a platform which is a very powerful canvass to launch their creativity,” he says.

On the powertrain front, Honda remains on tap to launch a new-generation 4-cyl. turbodiesel in 2009.

Although many new diesels will integrate urea injection to neutralize oxides of nitrogen emissions, Mendel says Honda’s engine will not require it. Instead, Honda has developed a 2-stage catalyst that produces urea on its own in the first stage and then cleans and purges it in the second.

“That means there’s no 22.0L (5.8-gallon) tank (of urea) to maintain, and a lot of people are happy about that,” he says. Honda has not yet specified displacement for the new mill, nor has it announced which vehicles will receive it.

There is no plan, at this point, for a diesel hybrid-electric vehicle, he says. Instead, Honda is preparing to launch a new HEV platform in the U.S. in the next few years, one that is more affordable and better equipped for smaller cars, positioned beneath the Civic Hybrid.

“That’s another 100,000 units for North America,” he says, adding that Honda will announce next year whether the new HEV will use nickel-metal hydride or lithium-ion batteries.

Also, a next-generation fuel-cell car, the FCX Clarity, will be leased in small numbers next year in Southern California.

In manufacturing, Honda has expanded capacity at its Anna, OH, engine plant and is building a new engine facility adjacent to its vehicle assembly site in Alliston, ON, Canada.

Overall, Mendel knows 2008 will be a challenge for Honda and the rest of the U.S. auto industry.

“I think it’s going to be a tough year coming up,” he says. “I think we will see more uncertainty before it pans out.”